Post By: John Grgurich, Content Manager, StarCompliance
Your StarCompliance blogger has been on the job for nearly two years now: interviewing compliance professionals from around the globe, some operating at the highest level. And if there’s one thing consistently brought up by these interviewees, it’s the sense of frustration they feel when confronted by senior leadership with the question: “So, we’ve implemented this automated compliance monitoring system you wanted, when can we begin cutting people?”
Thinking like this is frustrating because compliance professionals know that’s not what compliance software is meant to do. It’s not meant to be a people-cutting tool. It’s meant to be a work-cutting tool. So how does senior leadership get to this kind of thinking, and what can be done to turn it around?
The Language Trap
Senior leadership may have gotten there simply because the software was sold to them as such, either internally or externally. Perhaps compliance, eager to get a new platform in place, made an implicit suggestion or even explicit promise of eventual cost savings through staff cuts. Perhaps an outside vendor acted similarly in an effort to make a sale. To get a compliance platform right, a firm needs to expend a significant amount of internal resources if it’s building internally, or the time and talent of a dedicated, experienced team of third-party developers if it’s having one built by an outside vendor. “Thousands of hours of planning go into trying to make it very easy for someone to do something complex by just hitting one button,” offers Suzanne,* the CCO for a global asset manager.
There’s also potentially a trap in the very language used to describe the product. “Automated” brings to mind robots: automatons that need limited supervision, if any, to get the job done, whatever it is. And unreasonable expectations can be attached to anything described as automated. Again, Suzanne: “It’s about how compliance officers or employees can do what they need to do quickly and accurately, ideally with a single keystroke. That’s ultimately the point of automation: how you save your end user time.”
A corollary to the automation language trap is confusion between artificial intelligence and algorithms. In short, algorithms are software programs that are designed to perform a single task or single set of tasks. AI is software operating at the next level—programs that can learn on their own and more closely emulate human capabilities—but the field is in its infancy. Hence, automated compliance platforms, as they exist today, do not function as people replacements.
Just Say No
The best cure for any affliction is prevention. To keep senior leadership from ever reaching the wrong conclusion about what automated compliance software can or can’t do, make sure you or a compliance team member has a seat at the decision making table. “You need to get buy-in at all levels, but certainly from senior leadership.” So says Barbara,* a 20-year compliance and risk veteran who recently had a long conversation with your blogger on the subject of automation. “And it’s imperative senior leadership recognizes the limitations of the technology being proposed: that it’s not a silver bullet that will address all your challenges at the flip of a switch.”
But presuming you didn’t get this point properly across, or were perhaps even subverted in your efforts, what’s your best defense against the call for cuts? Again, Barbara: “Just say ‘no.’ Tell them, ‘we’re not getting rid of people just because we have this new piece of tech.’ Tell them, ‘this will allow us to divert resources to do more of something else.’ Explain that it’s an overall strengthening of your compliance program. You need to always have a well-crafted case at hand, and then stand your ground.”
The ‘overall strengthening’ argument is a good one, and puts you on solid ground with your peers from the compliance industry. “I’m in this great CCO networking group,” says Suzanne. “It’s pure firms, and we share best practice solutions. It’s a good way to find out how things are being done. And at all of these shops, nobody is eliminating people. They may be repurposing people for other departmental uses, but no one is looking at regtech as an excuse to get rid of people.”
Another angle on the overall strengthening approach is how repurposing can keep compliance officers from becoming bored and possibly complacent in their work. Suzanne: “People on my team are mostly specialists: experts in a certain area. I have someone who does registration. Someone who runs the control room. Someone who does employee trade surveillance. But if I can make them generalists, and have my trade surveillance expert back up my email surveillance expert, it gives them both something that’s a bit more interesting and different than what they’ve otherwise been doing day after day.”
“It’s up to the compliance officer to be creative. To think about firm culture and the best way to position a positive and expansive approach to tech. Because to eliminate people, there’s always the dilemma, ‘how many people can we eliminate?’ My answer always is, ‘no one.’ Because now I can free up that person to do all these other things that I’ve had in mind for the last five years that I haven’t been able to get to. Even in the best of automated monitoring systems, information can change. Tickers. Company names. People come and go. And then it’s up to a human to go in and make a change in the platform.”
*Suzanne and Barbara’s real names have been withheld at their request.